The 140% year-over-year increase in quarterly earnings was principally due to improvements in ROV, Subsea Products, and Subsea Projects operating profits. These improvements reflect Oceaneering's business focus on deepwater and subsea completion activity and an increase in hurricane damage inspection and repair work. Summary of Results (in thousands, except per share amounts) Three Months Ended Mar. 31, Dec. 31, 2006 2005 2005 Revenue $289,509 $210,737 $288,725 Gross Margin $60,317 $33,203 $56,176 Operating Income $37,964 $14,493 $30,581 Net Income $25,502 $10,592 $19,701 Diluted Earnings Per Share $0.93 $0.40 $0.72 Weighted Average Number of Diluted Shares 27,388 26,510 27,282
For the fourth quarter of 2005, Oceaneering reported revenues of $289 million and net income of $19.7 million, or $0.72 per share. The 29% sequential improvement in quarterly net income was largely attributable to increased operating income from our ROV, Subsea Products, and Inspection segments and equity income from the Medusa Spar. Results for the fourth quarter of 2005 included a $6.1 million pre-tax asset write-down in our ROV segment and reflected an effective income tax rate of 29.2%. The tax rate for the first quarter of 2006 was 35.6%.
John Huff, Chairman and Chief Executive Officer, stated, "We achieved record net income for the fourth consecutive quarter as market demand for our subsea services and products remained at a very high level. These earnings reflect the growth strategy we have in place, the ongoing secular demand growth for our offshore oilfield niche markets, and our participation in Gulf of Mexico (GOM) hurricane damage inspection and repair projects.
"Net income for the quarter was well above our EPS guidance range as all of our oilfield business activities performed above expectations, particularly Subsea Products and Subsea Projects. Subsea Products achieved record quarterly operating income from profit increases on sales of ROV tooling and Installation/Workover Control System rental services. Subsea Projects benefited from continued demand for GOM hurricane damage inspection and repair services at the unprecedented level set last quarter.
"ROV operating income sequentially improved due to an increase in average pricing and the fourth quarter asset write-down. Inspection operating income rose as a result of normal seasonality and our ongoing effort to sell more value-added services. Equity income from the Medusa Spar increased as we benefited from production for the full quarter.
"Subsea Products backlog at the end of March was $222 million. During the quarter we commissioned our large cabling machine at our Panama City, Florida facility, and we are currently manufacturing the first steel tube umbilical with this new equipment. In mid-April we began using our vessel The Performer, an ROV support vessel equipped with a moonpool-deployed Hydraź Millennium ROV, in the GOM to perform deepwater inspection, maintenance, and repair (IMR) work. In April we also chartered the M/V Island Ranger, a Class 2 dynamically positioned vessel, for a three-year term commencing in February 2007. The Island Ranger, to be outfitted with two of our ROVs, will augment our ability to perform subsea IMR projects in the ultradeep waters of the GOM.
"Since our last quarterly financial press release, our assessment of the 2006 earnings prospects for all of our oilfield activities has improved, particularly for our ROV, Subsea Products, and Subsea Projects businesses, due to higher pricing and utilization of resources. Given our first quarter results and the improved outlook for the balance of this year, we now expect to achieve record EPS in 2006 of $3.60 to $3.90. This is up 25% from our previous guidance. For the second quarter we are forecasting EPS of $0.95 to $1.05."
Most Popular Articles
From the Career Center
Jobs that may interest you